The Letter of Intent for Subcontractor is a crucial document in Indonesian construction and infrastructure projects, used when a main contractor needs to formally express their intention to engage a subcontractor while the main subcontract agreement is being finalized. It operates under Indonesian law, particularly the Construction Services Law (Law No. 2 of 2017) and related regulations, providing a framework for preliminary commitment while protecting both parties' interests. The document typically includes essential elements such as scope outline, commercial terms, and binding provisions like confidentiality, while allowing flexibility for detailed terms to be negotiated in the final subcontract. This type of document is particularly relevant in Indonesia's growing construction sector, where complex projects often require careful structuring of contractor-subcontractor relationships and compliance with local regulatory requirements.
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1. Parties: Identification of the main contractor and subcontractor, including their complete legal names, registration numbers, and addresses
2. Background: Context of the main project, relationship between parties, and purpose of the LOI
3. Definitions: Key terms used throughout the document
4. Project Overview: Brief description of the main project and the specific work package intended for the subcontractor
5. Scope of Work: Preliminary outline of the intended scope of works for the subcontractor
6. Commercial Terms: Indicative pricing, payment terms, and commercial framework
7. Timeline: Expected duration of works and key milestone dates
8. Conditions Precedent: Conditions that need to be satisfied before entering into the formal subcontract
9. Duration of LOI: Validity period of the LOI and deadline for formal agreement execution
10. Binding Provisions: Specific terms that are intended to be legally binding, such as confidentiality and exclusivity
1. Exclusivity: Include when the main contractor requires the subcontractor to work exclusively on this project
2. Preliminary Works: Include when certain works need to commence before the formal subcontract is signed
3. Resource Commitment: Include when specific resources or personnel need to be reserved for the project
4. Parent Company Guarantee: Include when financial backing from a parent company is required
5. Dispute Resolution: Include when parties want to specify how disputes during the LOI period will be handled
6. Break Fee: Include when compensation is to be paid if either party withdraws from negotiations
1. Preliminary Scope of Works: Detailed outline of the intended works and deliverables
2. Preliminary Program: Initial project timeline and key dates
3. Commercial Framework: Detailed breakdown of proposed rates and pricing structure
4. Key Personnel: List of key personnel from both parties involved in the project
5. Required Permits and Licenses: List of necessary regulatory approvals and licenses needed for the work
Authors
Relevant legal definitions
Clauses
Relevant Industries
Construction
Infrastructure
Engineering
Mining
Oil and Gas
Real Estate Development
Industrial Development
Transportation
Energy
Telecommunications
Relevant Teams
Legal
Commercial
Procurement
Operations
Project Management
Construction
Risk Management
Business Development
Contract Administration
Technical
Relevant Roles
Project Manager
Contract Manager
Commercial Manager
Procurement Manager
Construction Manager
Legal Counsel
Site Manager
Operations Director
Commercial Director
Business Development Manager
Subcontract Administrator
Risk Manager
Quantity Surveyor
Chief Operating Officer
Technical Director
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